McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Part 3

UNDERSTANDING
CUSTOMER
REQUIREMENTS

5-2
Provider Gap 1: The Listening Gap

CUSTOMER
Expected
Service

COMPANY

Company
Perceptions of
Customer
Expectations

5-3
Provider Gap 1: The Listening Gap

 Not knowing what customers expect is one of the root

causes of not delivering to customer expectation.
 The listening Gap: (Customer expectations of service –
Company understanding of those expectation)
 So our objective is to link between the customer and
the company.
 As what customers expect is not always the same as
what companies believe they expect.
 We understand that companies listen to customer
through research
Key Factors Leading to Provider Gap 1

5-5
 Chapter
Listening to Customers 5
through Research
 Using Customer Research to Understand Customer
Expectations
 Elements in an Effective Service Marketing Research
Program
 Analyzing and Interpreting Customer Research Findings
 Using Marketing Research Information
 Upward Communication

5-6
Research Objectives for services

 The first steps in designing service marketing research

are the defining problem and research objectives.
 Does the company want to know how customers view
the service provided by the company?
 What customers want from the company five years
from now?
 To answer those questions managers require different
kinds of research strategy.
 So research objectives thus translate into action
questions.

5-7
Common Research Objectives for Services
 To discover customer requirements or expectations for service.
 To monitor and track service performance.
 To assess overall company performance compared with that of competition.
 To assess gaps between customer expectations and perceptions.
 To identify dissatisfied customers, so that service recovery can be attempted.
 To gauge effectiveness of changes in service delivery.
 To appraise the service performance of individuals and teams for evaluation,
recognition, and rewards.
 To determine customer expectations for a new service.
 To monitor changing customer expectations in an industry.
 To forecast future expectations of customers.
 Read page 124 to 125

5-8
Criteria for an Effective
Service Research Program
 Includes both qualitative and quantitative research
 Includes both expectations and perceptions of
customers
 Balances the cost of the research and the value of the
information
 Includes statistical validity when necessary
 Measures priorities or importance of attributes
 Occurs with appropriate frequency
 Includes measures of loyalty, behavioral intentions, or
actual behavior

5-9
Includes both qualitative and quantitative
research
 Qualitative research : Exploratory, preliminary, and are
conducted to clarify problem definition, prepare for
more formal research or gain insight when more formal
research is not necessary.
 The result of qualitative research play a major role in
designing quantitative research.
 Quantitative Research: in marketing is designed to
describe the nature, attributes, or behaviors of
customers empirically and test specific hypotheses that
a service marketer wants to examine.

5-10
Includes both expectations and perceptions
of customers
 A measurement program that captures only
perceptions of service is missing a critical part of
service quality equation.
 Companies need to incorporate measures of customer
expectations.
 So understanding the customer’s requirement that
matter for them through qualitative and quantitative
research may highly desirable.
 Assessing customer expectations and compares these
with perception levels, usually by calculating the gap
between expectations and perceptions.

5-11
Balances the cost of the research and the
value of the information
 One cost is monetary, including direct cost to
consumer research companies, payments to
respondents, and internal company cost incurred by
employees collecting the information.
 Time costs

5-12
Includes statistical validity when necessary
 Carefully control of sampling bias and statistical validity.
 Not all forms of research have statistical validity, and
not all forms need it.
 Most forms of qualitative research, for example, do not
possess statistical validity.

5-13
Measures priorities or importance of
attributes
 One of the most common mistakes manager make in
trying to improve service is spending resources on the
wrong initiatives.
 Therefore research must documented the priorities of
customers’

5-14
Occurs with appropriate Frequency
 A single study of service provides only a “ Snapshot”
 “Ongoing Research”

5-15
Includes Measures of Loyalty, Behavioral
Intentions or Behavior
 Measuring the positive and negative consequences of
service quality along with overall satisfaction or service
quality scores.
 Understanding behavioral intentions may let you to
know the willingness of the customers to recommend
the services to others and repurchase intent.
 Positive behavioral intention: recommending company
to others, remaining loyal, spending more with the
company etc.
 Negative behavioral intention: saying negative things to
others, doing less business with the company, switching
to another company etc.
5-16
Elements in an Effective Customer Research
Program for Services
 Complaint Solicitation : Good service organizations
take complaints seriously.
 Not only do they listen to complaints-they also seek
complaints as communication about what can be done
to improve their services & their service employees.
 Firms that use complaints as research & document
them, then use the information to identify dissatisfied
customers, correct individual problems where possible,
and identify common service points

5-17
Elements in an Effective Customer Research
Program for Services
 Critical incident technique (CIT) is a well proven
qualitative research approach that offers a practical
step-by-step approach to collecting and analysing
information about human activities and their
significance to the people involved. It is capable of
yielding rich, contextualized data that reflect real-life
experiences.
 Relationship surveys are there to investigate a
customer’s loyalty to a company/brand. These types of
surveys ask customers to consider the overall
experience and satisfaction they have with a company
and are typically carried out at regular intervals (e.g.,
quarterly, half-yearly or yearly). 5-18
Elements in an Effective Customer Research
Program for Services
 Post-transaction surveys: in most cases, are only
conducted after you have a functioning relationship
survey. This is because the results of a relationship
survey should help determine the touch points that
need to be surveyed transactionally.
 “Which touch points do customers choose the most as
the reason for their score, in the relationship survey?”

 This question should guide your transactional survey

process.

5-19
Elements in an Effective Customer Research
Program for Services
 Market-oriented ethnography : helps companies
understand the consumer in terms of cultural trends,
lifestyle factors, attitudes and how social context
influences product selection and usage.
 The term market-oriented ethnography refers to an
ethnographic focus on the behaviour of people
constituting a market for a product or service

5-20
Elements in an Effective Customer Research
Program for Services
Complaint • To identify and attend to dissatisfied customers
• To identify common service failure points
solicitation
• To identify “best” practices” at transaction level
Critical incident •
•
To identify customer requirements as input for quantitative studies
To identify common service failure points
studies • To identify systemic strengths and weaknesses in customer-contact
services

• To monitor and track service performance

Relationship • To assess overall company performance compared with that of
competition
surveys •
•
To determine links between satisfaction and behavioral intentions
To assess gaps between customer expectations and perceptions

• To obtain immediate feedback on performance of service transactions

Posttransaction •
•
To measure effectiveness of changes in service delivery
To assess service performance of individuals and teams
surveys • To use as input for process improvements; to identify common service
failure points

• To identify/attend to dissatisfied customers

Social media •
•
To encourage word of mouth
To measure the impact of other advertising

5-21
Elements in an Effective Customer Research
Program for Services (continued)
• To research customers in natural settings
Market-oriented ethnography • To study customers from other cultures in an unbiased way

• To measure individual employee performance for evaluation,

recognition, or rewards
Mystery shopping • To identify systemic strengths and weaknesses in customer-contact
services

• To monitor changing customer expectations

Customer panels • To provide a forum for customers to suggest and evaluate new service
ideas

• To identify reasons for customer defection

Lost customer research • To assess gaps between customer expectations and perceptions

• To forecast future expectations of customers

Future expectations research • To develop and test new service ideas

5-22
Portfolio of Services Research:

 Research Is NOT Just Surveys!

5-23
Common means for answering questions

 Ask customers directly

 mail, phone, face-to-face, online
 one-on-one, in groups, formal/informal
 Observing customers
 anthropological tools, qualitative depth
 Get information from employees and front line service
providers
 Database marketing research
 use customer information files
 “capture” behavior through data analysis

5-24
Sample Questions for Critical Incident
Studies
 Think of a time when, as a customer, you had a
particularly satisfying (dissatisfying) interaction with an
employee of ______________.
 When did the incident happen?
 What specific circumstances led up to this situation?
 Exactly what was said and done?
 What resulted that made you feel the interaction was
satisfying (dissatisfying)?

5-25
SERVQUAL Attributes
RELIABILITY EMPATHY
 Providing service as promised  Giving customers individual attention
 Dependability in handling customers’  Employees who deal with customers in a
service problems caring fashion
 Performing services right the first time  Having the customer’s best interest at heart
 Providing services at the promised time  Employees who understand the needs of
 Maintaining error-free records their customers
 Convenient business hours
RESPONSIVENESS
 Keeping customers informed as to when TANGIBLES
services will be performed  Modern equipment
 Prompt service to customers  Visually appealing facilities
 Willingness to help customers  Employees who have a neat,
 Readiness to respond to customers’ professional appearance
requests  Visually appealing materials
associated with the service
ASSURANCE
 Employees who instill confidence in customers
 Making customers feel safe in their transactions
 Employees who are consistently courteous
 Employees who have the knowledge to answer
customer questions
5-26
Analyzing and Interpreting customer
research findings
 Depicting marketing research findings graphically is a
powerful way to communicate research information.
 Zones of tolerance charts: Figure 5.2 plots customer
service quality perceptions relative to customers’ zone
of tolerance.
Perceptions of company performance indicated by the
circles and zone of tolerance boxes are bounded on the
top by the desired service score and on the bottom by
the adequate service score.

5-27
Analyzing and Interpreting customer
research findings
When the perception scores are within the boxes , the
company is delivering service that is above customer’s
minimum level of expectations.
When perception scores are below the boxes, the
company’s service performance is lower than the
minimum level and customers are dissatisfied.

5-28
Figure 5.2: Service Quality Perceptions
Relative to Zones of Tolerance by Dimensions
9
8
7 O
O O
6 O O
5
4
3
2
1
0

Reliability Responsiveness Assurance Empathy Tangibles

Retail Chain = Zone of Tolerance O= Service Quality Perception

5-29
Analyzing and Interpreting customer
research findings
Importance performance matrix:
 This chart combines information about customer
perceptions and importance ratings.
 The shading of the chart indicates the area of highest
leverage for service quality improvements-where
importance is high and performance is low.
 In this quadrant are the attributes that most need to be
improved.
 The lower two quadrant the attributes that are less
important , some of which performed well and others
poorly

5-30
Figure 5.3: Importance/Performance
Matrix
HIGH
High  
Leverage
Attribute Importance

 
 

 
Attributes to Improve Attributes to Maintain



  Low
Leverage

Attributes to Maintain Attributes to De-emphasize

LOW Attribute Performance HIGH

5-31
Using Marketing Research Information

 Understanding how to make the best use of

research – to apply what has been learned to
the business – is a key way to close the gap
between customer expectations and
management perceptions of customer
expectations.
 Use the research findings in a meaningful way.
 To drive change or improvement.

5-32
Upward Communication

 Upward communication is the flow of

information from front line employees to
managers, supervisors, and directors.
 Upward communication keeps managers aware
of how employees feel about their jobs, policies
and procedures, and the business in general.

5-33
Upward Communication

 Research for upward communication

 Executive visits to customers
 Executive or management listening to customers
 Research on intermediate customers
 Research on internal customers
 Executive or management listening approaches to
employees
 Employee suggestions
 Read page 147

5-34
Group Exercise

 Imagine you have been hired to work an internship in a resort

hotel in Hilton Head, South Carolina, for the summer. The
manager learns you have had this service marketing class. In
talking with you, she states that she feels the hotel is not always
providing satisfactory service and may be performing in some
areas below customer expectations. She stops talking and looks
at you. Remember your future career may be riding on your
answer. What do you tell her?

5-35
Group Exercise

 The better answer should begin with a discussion of how a

service marketing research program would be more appropriate
than any single type of research.
 The hotel will need a rich, multifaceted flow of information to
close the gap between customer expectations and management
perceptions of customer expectations. There should also be
questions about how much time and money is available for the
research project.

5-36
Group Exercise
 The basic answer is to suggest the hotel, at a minimum, use
complaint solicitation, critical incident studies and trailer calls to
identify common service failure points. It will also need to look
at its employees because they may believe the service provided
is adequate when customers do not believe this to be true. The
mystery shopper would be a good type of research to study
employees.
 Some students may also mention relationship surveys.
Finally there should be a brief discussion of how this research
study is useless if it is not used to drive change or create
improvements.

5-37